Lenders Now Required to Participate in Foreclosure Mediation Program

The Florida Supreme Court issued an order in December 2009 requiring all judicial circuits to implement a foreclosure mediation program. The Florida Supreme Court was concerned with the backlog of mortgage foreclosure cases throughout the judicial circuits.

The new Residential Foreclosure Mortgage Foreclosure Mediation Program began operation on Monday, July 12, 2010. The Program is being operated by the Palm Beach County Bar Association. The purpose of the program is to give homeowners and lenders an opportunity to mediate (or resolve) mortgage foreclosure lawsuits.

Prior to the implementation of the foreclosure mediation program, many homeowners were without any direct contact with their lender to discuss loan workout options. In a typical case, a homeowner has the following options:

1. Loan Modification: Permanent change to the terms of a loan (usually involves payment, interest, etc.)
2. Short Sale: The home is sold to another party and the Lender agrees to take less than the value of the mortgage.
3. Deed in Lieu of Foreclosure: Lender will accept a transfer of the property from the homeowner to the lender.

As part of the foreclosure mediation program, a representative from the lender will be required to participate in mediation either in person or by phone. Most importantly, the administrative order requires that the lender's representative have settlement authority. Settlement authority means that the lender's representative must be able to accept or reject any proposals made at the mediation. While you may not like the answer the lender's representative gives you, at least you will have an answer and begin making alternative arrangements. Homeowners will be required to submit hardship and financial information to the lender in advance of the mediation so that the lender may review and process the homeowner's financial information.

During mediation, the homeowner may be required to provide additional information regarding the living situation or finances in order for the lender to make its decision. The Mediator will provide an overview of the mediation process and try to guide the parties to a resolution of the case. The Mediator is impartial and will not take either parties' side.

Please visit the Residential Mortgage Foreclosure Program's website for more information. To learn more about the mortgage foreclosure mediation process, you may contact Legal Aid Society of Palm Beach County's Foreclosure Defense Unit at FDU@legalaidpbc.org or (561) 655-8944 ext. 325.

IMPORTANT: The information on this Website is not intended as legal advice or representation. No attorney-client relationship is created between the Legal Aid Society of Palm Beach County, Inc. and any person obtaining information from this website. Public benefits and other laws change frequently. We strive to keep this website up to date but cannot provide a guarantee that this information is accurate as of the time you are reading it.

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